When House Republicans restarted their campaign earlier this year to reform U.S. patent laws, they found the same bipartisan backing from heavyweights such as Google and Facebook but an increased opposition from some conservatives who are fearful it will trample inventors’ protections.
At the center of the debate is the Innovation Act, which attempts to address a timeworn issue aimed at cracking down on “patent trolls,” mostly shell companies that buy up vague patents with the intent of later suing other companies for infringement.
The questions being contested is whether the bill imposes overreaching standards on patent litigation that would make it hard for innovators to protect their property rights or whether it has just the right touch in making it tougher and more financially risky for patent trolls to file groundless lawsuits.
The legislative fight is pitting universities against industry groups, entrepreneurial innovators against the titans of Silicon Valley and some establishment Republican politicians against political newcomers.
Rep. Bob Goodlatte, Virginia Republican and House Judiciary Committee chairman, reintroduced the Innovation Act, which passed in the House last session by a vote of 325-91 but was killed in the Senate. Since the reintroduction, his committee has held four hearings.
Supporters say the bill will update intellectual property laws to rein in patent trolls.
“In recent years, we have seen an exponential increase in the use of weak or poorly granted patents by patent trolls to file numerous patent infringement lawsuits against American businesses with the hope of securing a quick payday,” Mr. Goodlatte said. “With our current patent laws being abused, American businesses small and large are being forced to spend valuable resources on litigation rather than on innovating and growing their businesses.”
Opponents of the legislation unveiled their high-profile pitchwoman, former Hewlett-Packard CEO and potential presidential candidate Carly Fiorina, who argued that the bill imposes overreaching standards on patent litigation that would make it hard for innovators to protect their property rights.
“There are some problems in our patent system and there are people who use the threat of patents inappropriately, but here we have a vast, sweeping piece of legislation that causes more problems than it solves,” Ms. Fiorina said.
“Just like with Dodd-Frank or our Byzantine tax system, this will allow the big, who can afford the teams of lawyers and lobbyists, to get bigger and the individual inventor will get weaker. Conservatives should continue to stand for innovation and property rights,” she said.
The revamped Innovation Act aims to discourage plaintiffs in patent lawsuits from dragging out cases over vague patent infringements in order to bank on settlements.
The bill would require plaintiffs to disclose the owner of a patent before a lawsuit is filed and explain why they are suing, and would require courts to determine the validity of patent cases early in the process.
The bill also would shift attorney fees to parties who bring lawsuits “that have no reasonable basis in law and in fact,” Mr. Goodlatte’s office said.
Many in the software and computer industry jumped to applaud the announcement and vowed to work with lawmakers to see the bill through to its enactment.
“As Congress works through the process, we remain outcome-oriented, focusing on protecting businesses from patent trolls,” said Michael Beckerman, CEO of the Internet Association, whose members include Google and Facebook. “The final bill must be as strong or stronger than the Innovation Act passed by the House in 2012 with overwhelming bipartisan support, in order to bring a permanent end to the chaos caused by patent trolls.”
Some conservatives see the reform legislation as a gift from the administration to Google, which stands to gain from a tightened legal patent process as it battles competitors such as Apple Inc.
Google has lobbied the administration heavily over the patent legislation. Google employees contributed more than $800,000 to each of President Obama’s two White House campaigns, according to Federal Election Commission data from the Center for Responsive Politics.
Last year, Google spent about $17 million on lobbying, and the majority of its efforts were focused on patent reform. In fact, Google spent more money than any other tech company on copyright, patent and trademark lobbying last year, according to the Center for Responsive Politics, which tracks campaign and lobbying expenditures.
With a new GOP majority in the Senate, House Republicans see an opportunity to pass the bill with bipartisan support and are making it a priority on the legislative docket.
Critics say Republicans are not considering how the proposal could unintentionally weaken property rights for startups and small innovators.
“Unfortunately, what they are sacrificing for the sake of this bipartisanship is the very basis by which our economy works,” said Adam Mossoff, a professor of law and senior scholar of the Center for the Protection of Intellectual Property at George Mason University.
“Rushing to pass bad legislation just so we can demonstrate a willingness to work with the White House is not the path to take. Despite the support of many Republicans in the last Congress, this legislation, as it now stands, is just another one-size-fits-all, big-government overhaul of a sector of the economy that is not broken,” Ken Blackwell, a former Ohio secretary of state, wrote in a January letter to 75 conservative leaders.
In a Jan. 21 letter to the House committee, a host of 250 companies, startups and innovators — including Qualcomm Inc., Merck & Co. and Monsanto Co. — objected to the bill, claiming the congressional action was unnecessary in the wake of legal measures that have adequately reined in the worst patent litigation abuses.
“As a result of these developments, we are even more concerned that some of the measures under consideration over the past year go far beyond what is necessary or desirable to combat abusive litigation. Indeed, new patent lawsuit filings already have dropped dramatically — 40 percent, year over year, from September 2013 to 2014,” they wrote.
A study by Lex Machina found that patent litigation rates were declining steadily and last year were back to 2009 and 2010 levels.
Mr. Mossoff said sweeping congressional action was unnecessary and that the bill was just a form of micromanagement.
“In fact, this is Congress kind of coming too late to the party and making things worse by now trying to appear as if they are contributing to the party. Moreover, what they’re actually doing is beginning to engage in micromanaging through direct legislation.”
Critics of the bill say that targeting individual problems would be a better solution than revamping the whole patent litigation system with unintended negative consequences.
Mr. Mossoff said Congress doesn’t have reliable evidence identifying the specific problems. He referenced a Government Accountability Office report that debunked studies used in drafting the legislation.
“Once you have the evidence that there is a problem, address it through targeted, limited, incremental approaches that ensure, while addressing the problem, you don’t actually damage the good innovators and the people who do need patents,” Mr. Mossoff said.
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